The US economy on October 23, 2026
Trade drag and energy inflation dominate a still-tight backdrop
Trade balance goods and services widened in the weaker direction, moving from -92826.0 to -105572.0 and remaining an alert; a more negative balance is a drag on GDP. Imports of goods and services accelerated to 22.176 year-on-year percent change from 12.336. WTI crude oil and Brent crude oil remain alerts despite both easing from their previous observations.
Rates & Monetary remains tighter, though its score eased from 0.56 to 0.51. The 10-year Treasury yield rose to 5.0 and the 10-year TIPS real yield to 2.66, adding pressure through tighter nominal and real conditions. Inflation remains stable, but the Import price index rose to 8.097 year-on-year percent change; Core PCE price index was 3.008 year-on-year percent change.
Labor remains stronger, with Labor force participation rate and JOLTS quits rate on watch; Consumer remains weaker, with the NY Fed Survey of Consumer Expectations, households expecting to be better off in a year, also on watch. Recession watch remains low, with no rules firing.
Written by an AI model from the data as of October 23, 2026. Every number in it (7) was checked against the data.
Business: Business stable as regional factory readings strengthen
Business remained stable. Dallas Fed manufacturing production rose to 29.5 from 16.1, while Empire State manufacturing general business conditions increased to 25.5 from 7.6; both readings are positive, indicating expansion. Both registered watch signals.
Core capital goods orders (nondefense ex aircraft), at a three-month annualised rate, eased to 16.483 from 18.109 but remained at a watch signal level. The signals point to strength in regional manufacturing and investment orders, without a change in the pillar state.
Financial conditions: Bank credit growth edges higher; conditions remain easy
Total bank credit’s year-on-year growth rose to 6.406 from 6.211, while the NFCI leverage sub-index increased to 0.215 from 0.207, a move toward more leverage building. Both indicators remain in calm states.
The Chicago Fed National Financial Conditions Index edged up to -0.496 from -0.502 and remains below zero, indicating conditions are still looser than average. Banks tightening C&I lending standards (large firms) fell to 0.0 from 8.1, indicating no net tightening in the latest reading; the pillar remains stable.
Government finances: Fiscal stable as debt and Treasury cash balances ease
Fiscal remained stable. Newly reported Total public debt outstanding (Debt to the Penny) edged down from 40439546016039.08 to 40413639012305.97, but remains on watch with a 1.8 z-score; its level reads as supply pressure.
Treasury General Account closing balance fell from 973653.0 to 945153.0, a drawdown that adds liquidity; it remains on watch. Federal interest outlays rose from 1252.858 to 1279.734 billions of dollars annualized and are also on watch, signaling fiscal strain.
Federal surplus or deficit (monthly) moved from -166778.812 to -26900.347, narrowing the deficit and the associated fiscal impulse and supply. Withheld income and employment taxes (rolling), on a rolling twenty-day total versus a year earlier, improved from -2.365 to 9.343, easing the earnings-weakness signal.
Growth: GDP growth eased as monthly measures strengthened
Real GDP’s quarter-on-quarter annualised rate eased to 2.22 from 2.492, while the Growth pillar remains stable versus its prior state. The slower quarterly pace contrasts with firmer monthly readings.
Industrial production year-on-year rose to 2.245 from 1.615, and Retail sales year-on-year increased to 6.288 from 5.556. Real personal consumption expenditures year-on-year also picked up to 2.574 from 2.251. The NY Fed Staff Nowcast edged up to 2.67 from 2.65; its next update is due today.
Households: Consumer confidence slips further; broader stress gauges remain calm
The NY Fed Survey of Consumer Expectations, households expecting to be better off in a year, fell to 24.068 from 25.865 and remains on watch, signaling weaker confidence. The Consumer pillar stayed weaker, unchanged from the prior state.
Real disposable personal income growth slowed to 1.301% year-on-year from 1.494%, while the Personal saving rate fell to 4.1% from 4.6%, pointing to softer income momentum and less saving cushion. Credit card delinquency rate eased to 2.85% from 2.91%, tempering the stress picture. No new Consumer data arrived.
Housing: Housing stable as starts fall and mortgage rates remain a constraint
Housing remains stable. Housing starts fell to 1221.0 from 1288.0, a weaker reading for construction, while building permits edged down to 1400.0 from 1403.0. An earlier Housing starts estimate was revised up from 1309.0 to 1369.0.
The 30-year fixed mortgage rate eased to 7.32 from 7.4, but remains a watch signal and higher rates still weigh on affordability. FHFA purchase-only house price index (SA), on a year-on-year basis, rose to 2.572 from 2.349; its signal remains watch.
Interest rates: Treasury yields eased, while real-rate readings remain on watch
The 10-year Treasury yield fell to 4.96 from 5.13, and the 2-year Treasury yield to 4.65 from 4.81; both remain on watch. The 10-year TIPS real yield also declined, to 2.64 from 2.76, easing real-rate pressure at the margin while remaining on watch.
The Effective federal funds rate was unchanged at 3.88, and the Rates & Monetary pillar remained tighter. Reserve balances with Federal Reserve Banks fell, a move that reads as scarcer liquidity; the 10-year minus 2-year spread stayed positive at 0.31.
Jobs: Labor steady; participation and quits remain on watch
The JOLTS quits rate remains at 1.9, below its year-ago 2.0, and is on watch with a z-score of -1.3; lower quits point to weaker worker confidence. The Labor force participation rate rose from 61.6 to 61.8, a stronger-labor direction, but remains on watch and below its 10-year mean of 62.418.
New claims data were mixed: the four-week average for Initial jobless claims eased from 198750 to 197750, while Continuing jobless claims edged up from 1707000 to 1711000. Both remain below year-ago levels. The Labor pillar stayed stronger, unchanged from the prior state.
Leading indicators: Weekly activity firmed; Leading & Composite is unchanged
The Weekly Economic Index, the pillar’s only new data, rose to 3.33 from 3.02. Because it reads as weakening when down, the increase points to firmer near-term activity. The Leading & Composite pillar remains stronger at 0.47, unchanged from the prior state.
Other readings are calm: CFNAI 3-month moving average edged up to 0.01 from -0.01, while the NY Fed yield-curve recession probability eased to 26.51% from 27.42%. The OECD composite leading indicator for the US remains below 100, though it rose to 99.854 from 99.718.
Prices: Import prices jump; other inflation readings firm unevenly
Import price index is the clear outlier: its year-on-year rate rose to 8.097 from 6.738, registering a watch signal at a 1.33 z-score. That points to stronger imported inflation pressure; the Inflation pillar remains stable.
CPI all items rose to 3.717 from 3.353 year-on-year, while Core CPI increased to 2.566 from 2.446. PPI final demand also accelerated to 6.346 from 5.582 year-on-year. Core PCE price index edged up to 3.008 from 2.983 year-on-year.
Underlying and expectation measures are mixed: Trimmed-mean PCE inflation (12-month) eased to 2.19 from 2.28. 5-year breakeven inflation and the NY Fed Survey of Consumer Expectations median 1-year inflation expectation rose, while 10-year breakeven inflation and the 5-year, 5-year forward inflation expectation declined.
Trade: Trade deficit deepens as imports accelerate
Trade balance goods and services worsened from -92826.0 to -105572.0 millions of dollars in August. Its alert reading, with a z-score of -2.59, marks a more negative balance and a larger drag on GDP.
Imports of goods and services rose to 22.176% year-on-year from 12.336%, a watch signal consistent with stronger domestic demand. Exports of goods and services also picked up, to 10.691% year-on-year from 9.343%, indicating firmer external demand. The Trade pillar remains weaker, unchanged from the prior state.